The Vietnam Equity Fund

The Vietnam Equity Fund (VEF) set out to provide shareholders with capital appreciation through investments in equity interests in listed and unlisted investments in Vietnamese companies, primarily those that have Equitized or are in the process of Equitization. “Equitization” is the process whereby state owned enterprises (SOEs) are first corporatised and the state then reduces its ownership of the paid-up equity capital of the enterprise. The Fund targeted those equitized SOEs which (a) have attractive businesses with promising growth potential, (b) have managements committed to improving transparency and corporate governance and (c) had the potential to list on the STC within one to two years.

The Fund had a two-step investment policy. At the first step, the Fund acquired small stakes in companies identified as candidates for more significant investment at a later date. These “Facilitating Investments” were designed to provide improved access to management and provide leverage to obtain additional information that would be used to determine whether to sell the Facilitating Investment or to increase the size of the investment. Individual Facilitating Investments were limited to a size that reflected the prevailing trading activity in the individual shares, to allow an orderly disposal of the position, should this be desired

VEF is incorporated in the Cayman Islands as a limited liability, exempted company.

The Fund closed in July 2005 with commitments of Euros15 million. The principal investors are European Development Finance Institutions, along with Finansa Fund Management. The investment period ended in July 2007 and the fund liquidated the bulk of its investments in early 2007.

The Fund generated a net IRR of 111% p.a. to 31 August 2008 and the return on capital has been 2.16x.